NC sweepstakes cafes still open, despite 2010 ban

LOUISBURG (AP) — At Goodtimes Internet Cafe, a handful of patrons wiled away the afternoon playing Wheel O' Treasure, a fast-moving computer game with spinning pots of gold and cartoon leprechauns dancing in a shower of shamrocks.

The games that mimic Vegas-style slots are supposed to be banned. Still, they are offered at this sleepy Louisburg sweepstakes parlor and at hundreds more like it, operating daily in suburban strip-malls and country crossroads across North Carolina.

More than three months after the state Supreme Court unanimously upheld lawmakers' most recent attempt to ban the sweepstakes, there has been no visible statewide law enforcement effort to put the multimillion dollar industry out of business.

The Division of Alcohol Law Enforcement has the explicit responsibility to root out illegal gambling.

Public Safety Secretary Kieran Shanahan, who supervises the department, said Thursday that investigators are studying the issue.

"We have been conferring with our law enforcement partners and prosecutors statewide on how to best monitor and enforce the sweepstakes law," Shanahan said. "We also have been monitoring the state of the law and how the legislature will respond to the operators who keep changing their configurations citing that they are in conformance."

As state-level authorities deliberate, local prosecutors and law officers in more than a dozen North Carolina jurisdictions have taken action, raiding cafes, seizing computers and making arrests.

On Tuesday, Cumberland County Sheriff Earl "Moose" Butler sent his deputies to raid six of the sweepstakes cafes operating in Fayetteville and the area around the U.S. Army's Fort Bragg. They arrested nine and seized dozens of computer terminals. Within hours of the raids, most of the remaining 50 or so cafes operating in Cumberland had closed up shop.

Jim Harris, a Fayetteville businessman who owns two cafes in the county, was among those who shut their doors. He said Wednesday he had already laid off his employees and does not intend to reopen unless sweepstakes operators are successful in getting new legislation passed to legalize the games.

"We want to make people aware of the benefits of keeping this industry operating in North Carolina," said Harris, who represents a group called Coalition for Electronic Sweepstakes. "It seems to me the issue is not gaming, because we've already got that when they passed the lottery."

Harris wants lawmakers to legalize sweepstakes in exchange for charging a $1,500 licensing fee for each machine and taxing the industry's profits. He provided a copy of a 2011 economic impact study that claims sweepstakes operators account for as many as 6,000 jobs and about $153 million in direct annual spending.

North Carolina lawmakers first passed a ban on video poker and all other electronic gambling in 2006, following a political scandal involving political donations from the games' operators. The industry quickly adapted, introducing new sweepstakes games they said complied with the law.

Lawmakers responded with new legislation in 2008 and 2010 that made it unlawful to possess a game terminal that simulates slot machines or are used for the display of electronic sweepstakes. The makers of sweepstakes software then sued the state, saying the ban violated their Constitutional free speech rights.

The resulting court fight dragged on two years, culminating in the December 2012 Supreme Court decision upholding the ban.

"Plaintiffs have attempted to skillfully disguise conduct with a fašade of speech to gain First Amendment protection for their conduct," the justices wrote. "We have stripped the transaction of all its thin and false apparel and considered it in its very nakedness, and have found plaintiffs' arguments unavailing."

Attorney General Roy Cooper, whose agency successfully defended the state ban before the Supreme Court, predicted more local authorities will follow suit as North Carolina prosecutors succeed in winning convictions against those charged.

"For years this industry has tried every trick in the book to get around the laws the legislature has passed to shut them down," Cooper said. "We have fought them in court at every turn, and will continue to do so. ... These cases are not as easy to tackle as you might imagine. This is a big-money industry and they spend a lot of effort trying to get around every legal angle."

Davidson County Sheriff David Grice has seen how tough it can be to shut down sweeps cafes. In January, weeks after the Supreme Court ruled, his deputies closed the Hickory Tree Business Center, saying the operation violated the state law banning the machines.

But the cafe's owners pushed back, asking a judge for a temporary restraining order. They claimed a recent change by its software provider put the machines in compliance with state law because it revealed the winners in advance. The judge dismissed the complaint.

To play at the cafes, customers get prepaid cards and then go to a computer to play "sweepstakes." Winners go back to a cashier with their cards and cash out.

The new software — called the pre-reveal system — allows participants to find out if they've won before they play the game.

Eddie Caldwell, spokesman for the North Carolina Sheriffs' Association, said the new software still amounts to gambling.

"If it looks like a duck, walks like a duck and quacks like a duck, it is a duck," he said. "The argument that the new software is somehow legal is a smoke screen."

Back at the Goodtimes Internet Cafe this week, manager Tami Richardson is worried she might soon be out of a job. But the ones who will be really hurt if the cafe were to close, she said, are her regular customers, whom she described as being like a big family.

"They come in just to relax, play fun games, look on the Internet for jobs," she said. "It's just a fun little community. It's something to do."

Several of those customers declined to be interviewed for this story, however. Asked why they were hesitant to talk, one woman replied that she didn't want her pastor finding out what she'd been up to.

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AP writer Biesecker reported from Raleigh, Weiss from Charlotte, and AP national writer Breed from Louisburg.